Shares of Intel Corp. led the Dow lower on Tuesday as worries about data-center inventory overshadowed the announcement of new PC chips with artificial intelligence capabilities for the upcoming holiday season.
Intel shares, which were down about 1% when CEO Pat Gelsinger began his keynote at the Innovation 2023 developer conference, continued to slide throughout the session, ultimately finishing down 4.3% at $36.34. This made Intel the worst-performing stock in the Dow Jones Industrial Average on Tuesday. After hours, the stock rose 0.5%.
During his keynote, Gelsinger revealed that Intel would release its long-awaited “Meteor Lake” chip, also known as the Core Ultra processors. These chips feature Intel’s first integrated neural processing unit, designed to provide “power-efficient AI acceleration and local inference on the PC.” Additionally, the fifth-generation Intel Xeon server processors will also be made available on December 14.
Gelsinger explained that the Core Ultra chip enables AI inferencing capabilities on a device without requiring an internet connection, ensuring that a user’s data stays local on the PC. This type of AI inferencing involves using existing data to make predictions or generate a response based on a user’s request.
Compared to generative AI models like OpenAI’s ChatGPT, where user data becomes part of the model stored in cloud servers, the Core Ultra prioritizes keeping data on the local device after Samsung Electronics encountered issues with ChatGPT earlier this year due to proprietary data being entered into the model.
As the demand for AI continues to grow, Intel has been working to gain attention amidst stiff competition from chip manufacturers Nvidia Corp. and Advanced Micro Devices Inc. Nvidia announced AI chips in March and has seen significant success with its data-center sales exceeding analyst forecasts. Similarly, AMD rolled out its AI product announcement in June, focusing on open-source AI in contrast to Nvidia’s software approach.
Intel shares bounced around Tuesday, ending lower.
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Later in the day, Intel’s CFO David Zinsner acknowledged that while the company has seen improvements in data-center demand over the past two quarters, it still needs a few more quarters to stabilize its inventory situation. However, Zinsner expressed optimism about the coming year, stating that inventory would gradually be resolved in the latter half of the year. He also mentioned that the data-center business should experience significant growth in 2024, following a surprising year of better-than-expected sales.
Intel’s CEO Gelsinger emphasized the impact of AI on the chip industry, noting that it has contributed to an estimated $8 trillion “siliconomy.” He showcased Intel’s local AI chip by demonstrating how it could answer questions in plain English without an internet connection. Rewind.ai, a personal AI service that stores data locally and does not rely on cloud storage or capture private browsing data, also made an announcement during the conference, stating that it now runs on Intel-based Macs and will soon be available on Microsoft Corp.’s Windows operating system.
Gelsinger also shared that chip designer Arm Holdings now supports Intel’s OpenVino open-source inferencing platform. Arm recently began trading on the Nasdaq. Gelsinger, who previously worked at Intel as a lead engineer, played a significant role in developing Intel’s complex instruction set computing (CISC) architecture for x86 CPUs, while Arm pioneered reduced instruction set computing (RISC) chips, which are known for their energy efficiency.
Despite Intel’s stock decline of 4.3%, the Dow only dropped 0.3%. The PHLX Semiconductor Index fell 1%, while the S&P 500 and Nasdaq Composite both finished down 0.2%. Nvidia shares declined 1%, and AMD shares dipped 0.7% on the same day. Year-to-date, Intel shares have risen 37.5%, while Nvidia shares have surged nearly 200%, and AMD shares have gained 56.9%.
